HW44_45sol

# HW44_45sol - = \$250,000(\$86,600(1-35 9(\$2,280,000 \$70,000...

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Problem 44 Assets \$9,100,000 Less non-interest bearing current liabilities 500,000 Invested capital \$8,600,000 Net income \$1,060,000 Add interest expense, net of taxes: 156,000 NOPAT \$1,216,000 EVA = NOPAT +/- Acctg. Distortions - CC [Invested capital +/- acctg. Distortions] = \$1,216,000 + (\$315,000*(1-35%) - 6.4% (\$8,600,000 + \$157,500 + \$405,000 + \$675,000) = \$1,420,750 - 6.4%(\$9,837,500) = \$791,150 Assets = Liab. + OE Rev Expe ETC - 2008 ETC - 2009 ETC - 810,000 900,000 202,500 08 607,500 202,500 202,500 09 225,000 09 225,000 405,000 675,000 157,500 ETC - 2007 630,000 157,500 07 472,500 157,500 08 315,000 157,500 ,09 157,500 Habit added \$791,150 to its parent company's shareholder value fduring 2009. It is a better method because it provides an incentive for managers to spend money on aspects \$240,000 x (1-35%)

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) enses - 2007 900,000 315,000 ts of a compa
Problem 45 A EVA = NOPAT +/- Acctg. Distortions - CC [Invested capital +/- acctg. Distortions]

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Unformatted text preview: = \$250,000 +(\$86,600*(1-35%) - 9% (\$2,280,000 + \$70,000 + \$110,400 + \$158,400) = \$306,290 - 9%(\$2,618,800) = \$70,598 Assets = Liab. + OE Rev Expenses Cust. Dev - 2010 Income 2012 175,000 198,000 35,000 10 Cust. Dev. - 2011 36,800 140,000 184,000 35,000 35,000 11 36,800 11 39,600 105,000 147,200 86,600 35,000 12 36,800 12 70,000 110,400 Cust. Dev. - 2012 198,000 39,600 12 158,400 B Digital division added \$70,580 to its parent company's (Zin Enterprises) shareholder value d C Type of entities = Investment centers D NOPAT: To adjust profits to what they would have been had the customer development cos Invested capital: to adjust total assets to what they would have been had the customer deve costs been capitalized. E They increase because costs that were expensed under GAAP are now treated as capitalize during 2012. sts been capitalized. elopment ed....
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HW44_45sol - = \$250,000(\$86,600(1-35 9(\$2,280,000 \$70,000...

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